Being Mindful of Your Own Finance Issues

All over the world in every country all consumers face the same problems with two things; income and taxes. Taxation is a monetary system imposed on individuals and businesses. The main reason for this is to finance the operations of the government. Apart from raising funds for government projects, taxes are also used as a weapon to discourage certain activities like smoking or consumption of alcohol. It is also used as a route for transferring wealth from one group to the other group, like taxes from rich people can be used for the welfare of the poor people.

The Self-managed super funds will ensure that you pay the taxes properly even after retirement and gives you a post retirement source of income. The best way to ensure that all the taxes are accounted properly is to use an experienced accountant. It will cost less than that of paying the fines if you do not use the correct process. There are a lot of private accountancy firms which are specialized in providing taxation and accountancy related services to individuals, big business firms and to the corporations as well. This makes the work of paying tax easy and less complicated for all.

It is very important to have a fair knowledge about the taxes. You can save money if you meet all the tax duties on time. This will also prevent you from paying any fine due to late payment. But taxation often creates problems and it is very important to understand everything about it. In some countries the rate of taxation is quite high and people look out for a way out to get a tax relief in any form possible. Due to this, a rumor is making rounds that you can get rid from paying taxes with the help of a living trust.

The art of accountancy or accounting, according to official definition, refers to the measurement, statement, or provision of financial data that is mainly used by lenders, managers, investors, tax authorities and other decision makers in making decisions regarding the allocation of resources between and within companies, organizations, and public agencies. Accounting is also defined by some as the art of “classifying, recording, and summarizing in a significant method and in terms of money, the transactions and events which are financial in nature, character, as well as interpreting the results thereof.”

Taxation is a monetary levy imposed on individuals and businesses, primarily to finance the operations of government, as well as raise funds for special programs or projects. Taxation may also be utilized for other major purposes aside from merely raising funds. It could be used to discourage certain activities such as smoking or alcohol consumption and may be a vehicle for transferring wealth from one group to another, like taxing the very rich to spend for welfare programs for the poor.

In countries like the United Kingdom, taxation may involve payments to different levels of government such as the central government, which is known as Her Majesty’s Revenue and Customs and the local government. Income taxes, National Insurance premiums, value added tax, corporation taxes and fuel duties are among the main sources of income for the central government. The value added tax, or VAT, which is currently levied at the standard rate of 17.5% on supplies of goods and services is also a major source of central government revenue. This is a tax levied on consumer expenditure. Another major source of government revenue is the corporation tax, which is levied on the profits and chargeable gains of medium and large companies. For corporation taxes, the main rate is 30%, and is generally levied on taxable incomes above £1.5m. Local governments as well as the central government also earn revenues from the income tax, as each working individual has a certain income tax levied on them, depending on their monthly income.

According to taxation experts, the authority to impose taxes comes from two sources. The first authority comes from legislation passed by parliament, which is called the ‘statute law’. These statutes are also generally published and give details of any changes or adjustments to current tax laws. These changes are mainly proposed by the Chancellor of the Exchequer, usually in the budget, and then passed into law by Parliament. Second, another major authority is called ‘case law’ and this is crafted from the decisions taken in court cases. Whenever taxation becomes quite complicated and disagreements sometimes stem from the HM Revenue & Customs and taxpayers, these eventually result in court cases. The final outcome reached in these situations then becomes the “case law”, which is seen as a major influence in future statute law interpretations.

There are a lot of private consultancy firms which specialize in providing taxation and accountancy-related services to sole proprietor businesses, firms or corporations. Generally, a taxation and accountancy consultancy service may have customers ranging from individuals who own a bakery or small store, to limited companies and major corporations, and they provide services that are tailored to suit each company or individual requirements.

Where does all my money go? If you are like most people, then you must be asking this to yourself most of the time. You must have more than likely discovered, at a most inconvenient time, that yours is gone! A way to manage your finances in the most resourceful way is one of the hardest things to figure out. If you learn to manage your money well, you’ll enjoy the sense of independence that comes from being in control of your finances, instead of your finances being in control of you.

For most people, it is not how much they earn, it is how much they are able to keep. Spending more than we earn is the recipe to certain financial disaster. Yet most people do just that. The most important thing to do is ‘Organize your finances’. You need to know how much money is coming in, how much is going out, and most importantly where it’s going. This is a task all too many people avoid if in debt, but avoiding your budget won’t make it any better if you’re not making ends meet every month, and that’s one of the reasons people get in debt in the first place. Write down your monthly expenditures and break them all down as much as possible. Are there non-essentials you can eliminate? Are you spending more money than you should be on something in particular? Getting everything down on pen and paper can help show you the real picture when it comes to your finances and so help you make decisions accordingly.

There are a few basic steps one could follow to make his task easier. Firstly, identify your income sources. Your income would include job earnings, savings, gifts, grants, financial aid, money from other sources, etc. You should list all sources of money, even if you don’t consider them to be significant. Secondly, list fixed and variable expenses. It’s usually easy to list the fixed expenses. You know what they are. If you have a car payment or a home loan installment, you know how much it is and when it’s due. The same is true if you have rent, car insurance and other fixed bills. Thirdly, it’s wise to have a savings account and deposit a regular amount on a monthly basis. Even a small amount can add up to a sizable sum over time, when you add to it consistently.

Even small efforts can sometimes help you in a larger way. Like organizing your errands should make a tank of gas last longer. If you plan to pay off a credit card, pay off the one with the highest rate first. This will definitely relieve you for a while.

There is another very powerful thing that you can do to prepare yourself to handle money wisely. If you want to have money, I suggest a good place to start is with your own discipline. If you want to elevate your self esteem and improve your discipline both at the same time, try the following. It will ensure that you have money all the time: Go to your bank. Withdraw the biggest single denominational note you can (say $100). Put the note in your wallet or purse then, and here comes the most important part, DO NOT SPEND IT! Nothing will give you greater self esteem and nothing will build financial discipline stronger than doing this. You will get tremendous self esteem to know that you can afford to buy lots of things if you want. You are in control of that money, it is not controlling you.

Poor financial management is one of the leading reasons that makes people fall into debt. In order to accomplish your goal of saving money, you have to be committed to it. Decide now that you will live on your spend-able income and put the rest away. You’ll be surprised at the peace of mind you will feel when you start paying yourself.

Resources

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